Ottawa is setting aside a block of wireless spectrum for an upcoming auction in an attempt to bolster smaller providers and draw new companies into the Canadian telecom industry.
The federal government announced July 7 it would set aside a 30-MHz block of AWS-3 spectrum specifically for new entrants, similar to what it did in 2008.
The 2008 auction led to the creation of small regional players like Wind Mobile, Mobilicity and Public Mobile.
“The government is repeating a policy that has clearly failed,” Canaccord telecom analyst Dvai Ghose told Business In Vancouver.
“The government has tried to segregate a significant amount of spectrum to the new entrants and all that’s happened is the vast majority of new entrants are in financial distress and haven’t built on the spectrum.”
Mobilicity is currently under creditor protection follow three unsuccessful bids by Telus to buy the struggling regional carrier.
The federal government did not support efforts by one of Canada’s “Big Three” telecom companies to acquire one of the smaller carriers that got its start from Ottawa’s 2008 auction. Telus had already purchased another small player, Public Mobile.
The government said the AWS-3 auction would take place before a 2500 MHz auction scheduled for April 2015.
Ghose said it appears the federal government is trying to force the smaller regional carriers — such as Wind Mobile and Mobilicity — to consolidate with Quebec-based Videotron and make a go of it nationally.
But he said that’s unlikely to happen without new rules for roaming rates, an ample supply of joint-venture partners and clarification from Ottawa regarding access to future spectrum on a preferential basis.
Ghose pointed out a Canadian Radio-television and Telecommunications Commission (CRTC) hearing for new roaming rules won’t happen until the fall. That review could take up to four months to complete and another four months before a decision is made public.
“We could literally be in April, May next year before we know what the CRTC wholesale rules are,” Ghose said.
“It’s a bit like saying to you, ‘I want to sell you this car but I’m not going to tell you what the price of gasoline is.’ Roaming is part of your ongoing cost.”
Industry Minister James Moore said the government wants the auction to lead to lower prices in the wireless sector.
“The rules for this auction, consistent with the ones for the 700 MHz and 2500 MHz auctions, will encourage more competition in the wireless market while ensuring the interests of consumers first,” he said in a statement.
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